At the beginning of the year 2019. Itlog Company has an investment property acquired at a cost of $ 2,000,000. On December 31, 2019, the fair value was $2,200,000 and on December 31, 2020, the fair value was $1,950,000. The property had a useful life of 25 years. Under the cost method and fair value method, what is the carrying value of the investment that should be carried in the balance sheet as of December 31, 2020?
Q: Equipment was purchased at the beginning of 2019 for P204,000. At the time of its purchase, the…
A: Solution: Original annual depreciation = (Cost - Residual value) / useful life = (P204,000 -…
Q: On January 01, 2019, the AI Wadi Company purchased machinery for OR 45,000. The estimated useful…
A: Depreciation:-It is the reduction in the value of the assets due to normal wear and tear. It is the…
Q: At the beginning of the year 2019. Itlog Company has an investment property acquired at a cost of $…
A: At beginning of year 2019, Itlog company acquired property at cost = $2000000 Useful life of…
Q: On January 1, 2020, HOWLSCo. acquired an investment property at a total cost of P25,000,000. At…
A: As per PAS 40" Investment Property" Initial cost of property measured at Cost including transaction…
Q: Credit Corp Ltd. purchases a building on July 1, 2019, for $500,000. The building is expected to…
A: The activities relating to the building from July 1,2019 to june 30,2023 fallow below statement:…
Q: On January 1, 2020, DAHLIA Company showed land with a carrying amount of ₱10,000,000 and building…
A: Solution: Calculation of revaluation surplus on Jan, 2019 Carrying amount of land = 10,000,000 Fair…
Q: Nickolai Company acquired a building on January 1, 2019 at a cost of P20,000,000. The building had a…
A: GIVEN Nickolai Company acquired a building on January 1, 2019 at a cost of 1, 000, 000 The…
Q: Tanaka Company has land that cost $15,000,000. Its fair value on December 31, 2020, is $20,000,000.…
A: Assets are carried at the fair value on the date of revaluation under revaluation model for…
Q: A. Using the cost model, what is the depreciation expense for the year 2020? Note that asset was…
A: Investment Property is a property which is held by the owner or lessee for the purpose Earning…
Q: On 30 June 2019, TIE Ltd acquired a machire for $180 000 cash, with an expected useful life of 9…
A:
Q: Robust Company purchased an investment property on January 1, 2019, at a cost of P4,000,000. The…
A: A recognized gain occurs when an investment or asset is sold for a price that is larger than what…
Q: We Company has a single investment property, which had original cost of P5,800,000 and estimated…
A: Answer:- Carrying value meaning:- The carrying value of a company's assets is a measure of its…
Q: On July 1, 2022, WAVY Company has a building with a cost of P4,000,000 and accumulated depreciation…
A: Asset- held for sale means those noncurrent assets owned by the company which it is planning to sell…
Q: On January 2, 2019, Konan Corporation acquired equipment for $200,000. The estimated life of the…
A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…
Q: At December 31, 2019, certain accounts included in the property, plant, and equipment section of…
A: a. Prepare a detailed analysis of the changes in each of the following balance sheet accounts…
Q: On Sept 30, 2020, ABC acquired a building to earn rent through operating leases. The investment…
A: Depreciation is the loss in the value of the asset caused due to its usage, wear and tear. There are…
Q: ion reserve of 8640000 euros. At December 31, 2020, the property, plant and equipment was appraised…
A: The property Plant and equipment will be reported on the December 31,2020 statements of financial…
Q: On January 1, 2021, Morrow Inc. purchased a spooler at a cost of $40,000. The equipment is expected…
A: Depreciation expense per unit = (Cost- residual value)/Total expected units to produce
Q: On January 1, 2021, Alma Company showed land with carrying amount of P10,000,000 and building with…
A: Annual depreciation on building =P60,000,000 /20 years = P3,000,000 Life spent on January 1, 2021 =…
Q: On 30 June 2020, James Ltd acquired a machine for $200 500 cash, with an expected useful life of ten…
A: Fair Value Valuation of Non Current Assets While adopting the fair value valuation it can't measure…
Q: On January 01, 2019, the AI Wadi Company purchased machinery for OR 45,000. The estimated useful…
A: Double-declining-balance method: The depreciation method which assumes that the consumption of…
Q: SYD method, how much is the depreciation expense
A: Estimated useful life = 5 years Sum of years' digits = 5 + 4 + 3 + 2 + 1 = 15
Q: On 30 June 2019, Swan Ltd acquired a machine for $180 000 cash, with an expected useful life of 9…
A: When a company revaluates the value of its fixed assets on the basis of Fair Market Value, the…
Q: Cutter Enterprises purchased equipment for $78,000 on January 1, 2021. The equipment is expected to…
A: Straight-line depreciation method: The depreciation method which assumes that the consumption of…
Q: PEARS Company owned three investment properties. Details of the properties are as follows:…
A: In the model of fair value, the investment property is the one which is measured at the end of the…
Q: On January 1, 2020, DAHLIA Company showed land with a carrying amount of ₱10,000,000 and building…
A: The assets of a firm may be reported either by using the historical cost method or at the fair value…
Q: On January 1, 2019, Chiz Company acquired equipment to be used in its manufacturing operations. The…
A: Depreciation is considered as an expense charge on the value of the Asset. It can be calculated by…
Q: On Jan. 1, 2020, DEF Corporation acquired a P2,000,000 equipment which it accounts under the…
A: Depreciation for the year = 2000000 - 250000…
Q: On April 30, 2019, Min
A:
Q: What is the amount of revaluation surplus? * On December 31, 2021, Entity A determines that its…
A: Revaluation surplus is an excess of fair value over the carrying value of the assets. The carrying…
Q: On April 1, 2020, an entity purchased machinery for P3,300,000. The machinery has an estimated…
A: Fixed assets that are used in a business will undergo certain wear and tear due to continuous…
Q: pany committed to a plan to sell building PDU and classified this asset as held for sale. Building…
A: A Fixed Asset is usually reported at the cost or fair value unless and until it is meant to be sold.
Q: On January 1, 2019, Ciara Corporation acquired an equipment to be used in its manufacturing…
A: Given information, Useful life =10 years Residual value =P50,000 Depreciation for the year 2021…
Q: What amount should be reported as impairment loss on December 31, 2019? What is the carrying amount…
A: Given information is: On December 31, 2019, an entity has a machinery with the following cost and…
Q: double-declining-balance method, depreciation for 2021 and the book value at December 31, 2021,…
A: Double declining balance method :- It is the form of accelerated depreciation method. In this…
Q: revaluation deficit/impairment
A: Depreciation = (Cost of equipment - Residual value)/Useful life in years Cost of equipment =…
Q: On January, 2021, Joshtin Company owned an investment property which had an original cost of…
A: Fair value is the market value of net present value of the investment or property. Any change in…
Q: On January 1, 2020, DAHLIA Company showed land with a carrying amount of ₱10,000,000 and building…
A: Straight line method is a method of depreciation under same amount is charged as depreciation in…
Q: On Sept 30, 2020, ABC acquired a building to earn rent through operating leases. The investment…
A: Investment Property is a property which is held by the owner or lessee for the purpose Earning…
Q: Presented below is information related to equipment owned by Swifty Company at December 31, 2020.…
A: Cost 9,270,000 Less: Accumulated depreciation -1,030,000 Carrying Amount 8,240,000…
Q: On July 1, 2020, FDN Company purchased an equipment for P47,100,000. After 5 years of its estimated…
A: Carrying Value = Original Value of the asset - Accumulated depreciation Depreciation = ( Cost of the…
Q: On January 1, 2019, the Business Info Company had capitalized costs of P6,000,000 for a new computer…
A: The depreciation expense is charged on fixed assets as reduced value of the fixed asset with usage…
Q: At the beginning of 2019, Robotics Inc. acquired a manufacturing facility for $13.9 million. $10.9…
A: Given that, Cost of the building = $109,00,000 Residual value = $2900000 Useful life of asset = 25…
Q: The carrying amount of Building C on December 31, 2020 is P8,000,000 and had remaining useful life…
A: Information given in question: Carrying amount of Building C on December 31, 2020 is P8,000,000.…
Q: In January of 2021, the Phillips Company purchased a patent at a cost of $100,000. The company…
A: Cost of patent = $100,000 Useful life = 10 years
Q: Keil Company has a single investment property which had an original cost of P5,800,000 on January 1,…
A: In case of Fair value model, assets is measured at fair value and any change in fair value during…
Q: At the beginning of 2019, Robotics Inc. acquired a manufacturing facility for $12 million. $9…
A:
Q: The Salient company uses the revaluation model for its building. It acquired a building on January…
A: 1. 2018, and 2019, depreciation expenses = (450,000 - 50,000)/ 25 = $16,000 per year Accumulated…
Q: Jasmin Company purchased an investment property on January 1, 2017 at a cost of P2,200,000. The…
A: Cost of investment property = 2200000 Use ful life = 40 years Deprecation for 2 years =2200000/40…
At the beginning of the year 2019. Itlog Company has an investment property acquired at a cost of $ 2,000,000. On December 31, 2019, the fair value was $2,200,000 and on December 31, 2020, the fair value was $1,950,000. The property had a useful life of 25 years. Under the cost method and fair value method, what is the carrying value of the investment that should be carried in the balance sheet as of December 31, 2020?
Step by step
Solved in 3 steps
- On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.Dinnell Company owns the following assets: In the year of acquisition and retirement of an asset, Dinnell records depreciation expense for one-half year. During 2020, Asset A was sold for 7,000. Required: Prepare the journal entries to record depreciation on each asset for 2017 through 2020 and the sale of Asset A. Round all answers to the nearest dollar.During 2019, Ryel Companys controller asked you to prepare correcting journal entries for the following three situations: 1. Machine A was purchased for 50,000 on January 1, 2014. Straight-line depreciation has been recorded for 5 years, and the Accumulated Depreciation account has a balance of 25,000. The estimated residual value remains at 5,000, but the service life is now estimated to be 1 year longer than estimated originally. 2. Machine B was purchased for 40,000 on January 1, 2017. It had an estimated residual value of 5,000 and an estimated service life of 10 years. it has been depreciated under the double-declining-balance method for 2 years. Now, at the beginning of the third year, Ryel has decided to change to the straight-line method. 3. Machine C was purchased for 20,000 on January 1, 2018, Double-declining-balance depreciation has been recorded for 1 year. The estimated residual value of the machine is 2,000 and the estimated service life is 5 years. The computation of the depreciation erroneously included the estimated residual value. Required: Prepare any necessary correcting journal entries for each situation. Also prepare the journal entry necessary for each situation to record depreciation expense for 2019.
- Mystic Pizza Company purchased a patent from Prime Pizza Plus on January 1, 2019, for 72,000. The patent has a remaining legal life of 9 years. Prepare the journal entries to record the acquisition and the amortization for 2019, assuming Mystic Pizza amortizes its patents using the straight-line method over the life of the asset.Petes Petroleum, Inc., an SEC registrant with a calendar year-end, is in the business of constructing and operating offs] lore oil platforms. Petes Petroleum is required legally to dismantle and remove the platforms at the end of their useful lives, which is estimated to be 10 years. On January 1, 2019, Pete constructed and began operating an offshore oil platform off the coast of Brazil. The total capitalized cost to construct the platform was 3,700,000. In addition, while the future cost of dismantling the oil platform is difficult to estimate, Pete believes there is a 40% chance that the future cost will be 1,425,000, a 40% chance it will be 1,650,000, and a 20% chance that it will cost 2,125,000. The appropriate discount rate is 12%, and Pete uses the straight-line method of depreciation. Required: 1. Prepare the journal entries that Pete should record in 2019 related to the oil platform. 2. Prepare an amortization schedule for the asset retirement obligation. 3. Next Level Prepare a table showing the effect of accounting for the asset retirement obligation on assets, liabilities, shareholders equity, and net income relative to accounting for the associated costs at the end of the assets service life when the expenditure is made.Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.
- Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been capitalized as a cost of the factory building in 2015 when it should have been treated as a cost of production equipment installation costs. As a result of the misclassification, the depreciation through 2018 was understated by 110,000, and depreciation for 2019 was understated by 90,000. What would be the consequences of correcting for the misclassification of the property cost? a. The taxpayer uses the FIFO inventory method, and 25% of goods produced during the period were included in the ending inventory. b. The taxpayer uses the LIFO inventory method, and no new LIFO layer was added during 2019.